Meanwhile Back at the Ranch

Any money manager will tell you that holding a balanced portfolio is the key to maximizing returns on your investment over time. Your marketing portfolio should be similarly balanced in order to ensure your highest return on investment.

And while most corporate executives are aware of the relative risk and rewards of the holdings in their own investment portfolios, many don’t know how to balance their marketing portfolios to generate the highest return on their marketing investments (ROMI).

Marketing is an investment—just like equipment or employees—that should generate a measurable return for your business.  Knowing when and why to invest in a particular strategy can make a tremendous difference on your bottom line.

Like all investment options, each marketing strategy—advertising, public relations, direct marketing, web-based marketing, etc.—carries its own risks and rewards.  Properly balancing these strategies within your “marketing portfolio” can have a very real impact on your bottom line.

When considering different marketing communications investment strategies, begin by determining the virtual age of your brand.

At Nation Ranch, when we speak of virtual age, we generally are talking about the size of your marketing budget, level of awareness you have among target markets and your brand position and market share relative to your competitors.

We characterize brands as being in one of six stages: birth, infancy, childhood, adulthood and old age.

For example, a new product hitting the market would be considered at its birth and entering infancy.  Baby brands typically have small marketing budgets, little or no awareness and therefore no clear identity versus the competition.

These young brands, like younger investors, are better able to tolerate risk and an infant brand’s marketing portfolio should be more heavily weighted toward public relations, viral and guerilla marketing than that of a more established brand.

Each of these strategies is “high risk” in that you cannot guarantee that the news media will pick up your story or that word about your product will catch on in the blogosphere or in trendy Manhattan nightclubs.  

Properly executed, however, these strategies can pay big dividends for young brands that you can reinvest in “more secure” strategies such as advertising and database marketing.

Balanced with PR and Web-based marketing, a portfolio that includes advertising and database marketing can help a brand in its childhood grow into maturity, collecting loyal customers and growing market share along the way.

A brand in its adulthood can also engage in “adult” activities such as marriage and childbearing, in the form of mergers and spinning off subsidiary companies or brands.  Such activities bring their own unique marketing communications challenges and can require a complete rebalancing of your marketing portfolio.

Interestingly, as brands enter old age, marketers have the opportunity to tap the fountain of youth by re-introducing themselves to new audiences or by shaking up their marketing portfolios to encourage customers to experience their products and services in new ways.

There are exceptions to every rule of course.  Just as there are no shortage of established investors willing to take big risks in search of even greater wealth and fame, there are marketers who will invest in lavish advertising campaigns in order to drive sales of new products.

More often than not, however, such gambits fail to generate the return on investment the marketer had hoped for.  

The smart money is always focused on maximizing returns while minimizing risks over the long haul.  Protect your investment by acting your age when investing your marketing resources.